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  • Profile photo of aussieguy2000aussieguy2000
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    http://www.depreciator.com.au/

    I am sure you can find others, and get other recommendations, but I have used these guys a few times, and whilst they advertise they charge a small fee for updating them for you when required, I actually haven’t had to pay the two times I have had them updated (probably as I was a return customer). They did take three tries to get one right with the extra items I had done to the property, however they fixed it quickly and efficiently, so I would definitely recommend them. For around $600-$700 you can LEGALLY claim both capital works as well as all other fittings and fixtures correctly depreciated on the rules set by ATO on their life.

    As an example, for a property I purchased in 2002, I could claim $3909 in the first full year and $2478 last FY.
    For a property I bought in 2009, the first full year I claimed $4136 and last FY was $2700.
    Neither of these properties were new when we bought them, and you could obviously guess with an estimator how much a new place would depreciate for. I suggest these are worthwhile getting.

    And don’t forget to claim the depreciation schedule as well when you purchase it!

    Hope that helps somewhat.

    Profile photo of aussieguy2000aussieguy2000
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    The property I have had for a number of years (14) and I am refinancing for the equity as collateral, the loan is not changing its just moving to the same bank as our PPOR that we are about to purchase, so that the higher LVR on that loan can occur without LMI.

    I was exploring the CGT stuff, as if I were not liable for CGT on the transfer to my wife, then putting the property in both names is for sentimental reasons (and for satisfying the ATO its not JUST about tax), then if she were to pay the CGT in the future the difference would be a lot less the the stamp duty cost difference anyway. However if I have to pay CGT at my rate now vs her rate later, the transfer would not be worthwhile. My assumption was that the CGT event would only occur on a monetary sale, not a sentimental transfer of ownership (even though stamping tax still applies – death and taxes, I don’t know why I didn’t assume it before).

    At least I have explored the option before acting, what prompted this thought about when the CGT event occurs was a recent article I read about shares where a guy transferred some part of his shares to his wife for a small tax saving, and then the ATO pursued him for CGT which he was not aware he needed to pay on the transfer as no money changed hands, meaning he made a horror mistake and ended up well out of pocket than if he had held then himself.

    Profile photo of aussieguy2000aussieguy2000
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    Literally just found this, it does mention she was renting the property out and then tenant contradicted her story of living in it:

    http://www.domain.com.au/news/staying-over-at-boyfriends-place-costs-sydney-woman-first-home-owner-grant-20160317-gnl2ur/

    John

    Profile photo of aussieguy2000aussieguy2000
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    It’s a common mistake/misinformation provided by the lender that the security would need to be crossed.

    Obviously something the banks don’t want us to know, and to be honest I don’t think many of them would even know how to structure it, as they initially wanted me to pay off an investment loan to get this new mortgage, and it took some effort to get what I wanted… I guess if the bankers you were dealing with were smart enough to know complex investment lending and tax benefits, they would probably own a bank rather than work for one. (Having a really bad experience with NAB at the moment and I will never use them again after this, it’s not the first time I have run into mistakes and troubles that cause delays that have almost delayed settlement, with home lending either).

    Profile photo of aussieguy2000aussieguy2000
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    Seems like a complex question only a good tax accountant who really knows the ropes can answer :(

    Thanks for the help anyway.

    So to clarify on the CGT, if I transferred 50% to her I would cope a CGT event, and then if we sold it in say 12 months time and it went down, she would get a capital loss??? Not exactly a great outcome, though in the current climate it could happen and would be my worst case scenario.

    Profile photo of aussieguy2000aussieguy2000
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    Cross collateraisation is often used on a PPOR loan at 50% LVR to finance an investment at 95% and to be honest is sheer stupidity, and you almost deserve to lose your house if you gamble it on an investment, though there may be other purposes that are not for investments.

    Doing it the other way make good sense in my option and I am offering up my investment (46% LVR) to secure my PPOR at a higher LVR (90%) whilst avoiding LMI. Without cross collaterisation if I was to default on my PPOR the bank couldn’t just take my investment property but it wouldn’t be hard for them to get access to it via a court order if need be. Plus I will soon enough be in the position to pay off my PPOR and tell them to get stuffed if they try anything, at which time if I did, I would decouple the arrangement.

    I have done it twice now with success and save tens of thousands doing so, and I only ever keep the arrangement that way, whilst the investment helps my PPOR, not the other way around, once it has served its purpose it will move on, but not until my mortgage is below 80%.

    Profile photo of aussieguy2000aussieguy2000
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    Do you still live in the place at the moment and do you know any of the neighbours from that time? Perhaps if you are friendly with any of the residence from that time you can ask them to write a statutory declaration that you resided in the property and they regularly (at least once or twice a week) saw you at the property (if you were really there).

    Do you HAVE to submit the electricity bill? Can you ask the electricity company to issue you a simple letter stating that you had the electricity connected between the date you got it connected and now (or when you disconnected it) without providing an itemised bill? What about phone (mobile), internet, Foxtel, mail redirections, speeding fines or ANYTHING that was mailed to the address, receipt of these is another proof you lived there. If you can prove you resided there, your electricity usage could be used as circumstantial evidence in the event you cannot provide any other proofs and it would be a big one. If you can provide several proofs other than electricity I doubt you have any thing to worry about, as with these other proofs, they are unlikely to do you for living like a hippy and not using much electricity (key point being IF you do have other proofs).

    For electoral roll, I suggest you contact the AEC, however a couple of months back I changed my address to our PPOR we just sold on the rates notice so I could register my trailer in NSW a couple of months before I moved to NSW (less than 2 weeks to go now), save having to change the rego to the current state I am in and then again once we move, and the AEC was notified by the council. I had letters sent to my old PPOR address stating I am now enrolled there… point being I wouldn’t rely on electoral roll as a huge proof unless you voted at the school down the road from the property and can prove it.

    John

    Profile photo of aussieguy2000aussieguy2000
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    Are there any “portable” homes in the area people want to dispose of (ie give away – most give them away but you have to pay for transport), depending on your CGT liability, if someone was to dump an old house on the land, check what services you have to have connected (living without grid connected electricity isnt illegal is it?), move into it and sell the block… you may get lucky and find someone who will take it with the house, otherwise you may have to pay to have it dismantled and disposed of… if you CGT liability is 50k it wouldnt be worth it as that stuff isnt exacly cheap even for one of those houses, if it was 500k this strategy would save you the cost of a house (literally!)… obviously you would have to do enough to “prove” to the ATO that you actually lived in it if they came snooping… just an idea though.

    • This reply was modified 9 years, 2 months ago by Profile photo of aussieguy2000 aussieguy2000.
    Profile photo of aussieguy2000aussieguy2000
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    Hi Chattaway,

    This is one that I have look at for years, nearly 6 years actually, as I am coming up to the 6 year mark for my own PPOR in sydney since we started renting it out and we are looking at selling to capitalise on this, as to continue renting it out would be a huge hit to the hip pocket between capital gains and what we would be exempt for.

    Two things to note: you can only have one PPOR at a time, and cant swap at convenience, once you claim a new PPOR residence the old is no longer and it is an investment whilst the latter is the PPOR, however from how I understand it, this election is made when selling one of the residences rather that when purchasing (assuming both meet the 6 year rule and the PPOR rule, then you can choose which to claim as the investment and which to claim as the PPOR).

    The other is that the 6 year rule is 6 years RENTED in total between you occupying it, so if you rent it for 3 years leave it vacant for 2 years and then rent it for 2 years, this is only 5 years, and if you move back into it at any stage it resets the 6 year period so if you move for work again (such as Military people are likely to move in and out of a particular location a lot) you can rent it indefinietly as long as you live in it between each 6 years worth of renting – even to the point of you know you are going to live in it in 6 months time and it is almost at the 6 year mark, you leave it vacant for the 6 months so that the clock stops on the 6 years as it is vacant (as long as the 6 month vacancy is worth the loss of rent vs actual proportion of capital gain for the 6 year period).

    For more info on the facts rather than my less than expert interpretation above the ATO web site explains it well:

    https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Real-estate/Treating-a-dwelling-as-your-main-residence-after-you-move-out/

    – John

    • This reply was modified 9 years, 2 months ago by Profile photo of aussieguy2000 aussieguy2000.
    Profile photo of aussieguy2000aussieguy2000
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    So just to clarify, are you looking at selling as you want to find a new direction, somewhere else to live, or are you just wanting to gamble, hoping that prices will drop and you will pick up the neighbours house at a later date for a smaller price?

    If you are planning on retiring or a sea/tree change, then perhaps selling may be a good idea, it is a good time to sell, and I don’t see house prices going up much in the near future – but rental prices may, to catch up to the price surge. If it is the later you are hoping for, then I suggest you sell your house, take your small fortune to the casino and put it all on black… I like black more than red… as you are only gambling in doing so. The current market would be like a roulette wheel with a complete history board of reds – but that doesn’t guarantee a black spin and there is always zero – that out left field spin – that virtually no one predicted coming up, no one can predict what will happen. If you read posts for the last 10+ years across forums the nay-sayers have been “predicting” a bubble burst for the entire time (and even before these forums this was the case)…

    What I believe is that you may see a small price correction at some point, maybe 1-5% (possibly up to 10% in some Sydney areas) of property values, this is normal, then – unless the government has a magic wand to make thousands of houses magically appear over night – it will probably simply be a long period of flat prices for the next 5-10 years with a small increase at or below CPI. Noting that if you sell and then buy again, this 1-5% will quickly be eaten up by selling prices and stamp duty, so your chance of coming out in front is slim.

    That said, if the economy takes a dire downward spiral, that causes large unemployment figures and FORCES people to sell their homes on mass, then we will see a collapse in prices, but if prices drop slightly, and people aren’t forced to sell, then why would they? So the few that do sell for personal or lifestyle reasons will hardly push supply above demand, especially with a constant shortfall in available properties across the country – particularly Sydney. I for one am looking at selling in Sydney, but this is because the prices are great and I want to sell my home that is coming near to its end as my principle place of residence, so I can buy where I am currently living and renting – it doesn’t make sense to hold it.

    In the end it is your own decision, but you should make it for the right reasons, and not simply to try and make a quick buck, as the future of the property market will probably shock us all, and most of us will have wrong predictions on what will actually happen. Be happy with a roof over your head and don’t gamble it away if that is where your intentions lie, as you could put yourself in a far worst situation that you are now or the situation you are hoping to achieve.

    tl;dr
    I am no expert by any means, and I am sure the experts can pick at what I have said, but what they can’t argue with is to do it for the right reasons and don’t do it to gamble and make a quick buck.

    John

    • This reply was modified 9 years, 2 months ago by Profile photo of aussieguy2000 aussieguy2000.
    Profile photo of aussieguy2000aussieguy2000
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    Yeah, your right Terry, that would be strange. I have not looking into it much and forgot that stamp duty exemptions for transfers for equal shares to a spouse are only valid on the PPOR. So unless we were to move into this property at some stage, that is not a likely option, though as the place is positively geared and has a decent capital gain if sold, if we ever were to move to the area I would definitely consider it.

    Still the stamp duty cost versus the capital gain split between two as opposed to just myself (with my wife currently at home with the kids) if we were planing to sell may be beneficial, that’s one for an accountant to do the numbers for me though, as I would hate to get it wrong.

    • This reply was modified 9 years, 10 months ago by Profile photo of aussieguy2000 aussieguy2000.
    Profile photo of aussieguy2000aussieguy2000
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    Yeah it was just a weekend trip fly in Saturday, fly out Sunday, not a holiday in disguise, there are much cheaper ways to go to the beach than taking 2 flights each way to get there. Maybe next time I drive, take a couple of extra days and claim all my expenses (I’m not explicitly saying the family will be in the car, lol).

    Profile photo of aussieguy2000aussieguy2000
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    Depends on the council, if you have ever watched ACA or Today Tonight there have been 4+ story apartments build next to houses, leaving them in the shade all day (corrupt politicians doing anything for a buck) and others that are so strict that you make your front fence an inch higher than regulation they make you knock it down and redo it. So I am betting depending on the council and how much your other neighbours agree with it or protest it will be the biggest factor. As for turning two standard low density residential blocks into a mid-high density complex, no idea on the regulations with this.

    Profile photo of aussieguy2000aussieguy2000
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    Why not consider buying first and then getting the car lease after it, it is much easier to get the car lease, and if they won’t give it to you based on your capacity to borrow, you probably shouldn’t bother with it.

    As the average IP is negatively geared from the start, the “savings” from a lease come from the savings on tax, whenever I EVER calculate salary sacrifice/packaging options for their savings I always reduce my salary to what it would be after my negative gearing and work deductions. If were to earn 85k and have 10k worth of tax deductions (all types not just NG) it would drop you to a lower tax bracket, this should be the savings your investments are making you not leases/salary packaging. The person spruiking the car lease will calculate the savings based on the higher tax bracket, when in fact you are not in that tax bracket after your deductions, so the savings he sells you could actually be a negative, not a positive, and remember at the end of the lease you don’t own the car, you still have to pay for it (usually at around the current market value -usually an “agreed” – read: set by the lessor” value at the start of the lease) if you want to keep it, or roll over to a new wallet haemorrhaging lease on another car.

    If you want to estimate your “borrowing power” there are plenty of calculators you can use, work out how much you can borrow without the lease and then do a calculation with the lease, try to find one that is more than just 3 or 4 boxes to fill in, a detailed one may have separate areas to enter car/other loans and repayments rather than a simple calculator. One final piece of advice is I wouldn’t spend more than half your yearly salary on a car (lease or otherwise) if you can avoid it, preferably even less than half of your yearly net income after tax.

    • This reply was modified 9 years, 11 months ago by Profile photo of aussieguy2000 aussieguy2000.
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    One thing I would say is work it out based on NOT having that money first, it is never truly a gift especially from the in-laws who can hold it over your head. (That being said, they may be the perfect in-laws and it IS a great opportunity).

    One easy solution (as others have stated) is to borrow the maximum amount (80%) and put the money they give you in an offset account, that way if anything ever happens its not in the house, but just saving interest, if it ever needs to be given back it’s a simple bank transfer, this also has benefits if you need to access the cash for any reason, don’t expect the bank to extend your mortgage to help cover injury or medical costs if you can’t work, if it’s already there you don’t have to beg them to help.

    As an example bought our property in Sydney in 2009 and the property has gone up about around 50% since then (60-70% if I was quoting as an overly optimistic seller), if we sell it we don’t pay capital gains and as we have a large portion of it paid off (via offset account), our interest is only around $600-700 a month. When we bought it rents in the area were around 350-500, now they are more like 500-700, so if we were renting in the area, we would now be paying almost weekly what our mortgage costs monthly, and we would not have the equity in the property. Whenever we want to use this equity for personal or investment we can.

    To quote Terryw above (as long as you have considered your options)

    I would:

    1. Bloody oath

    • This reply was modified 9 years, 11 months ago by Profile photo of aussieguy2000 aussieguy2000.
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    At best you sell the house in the long term and get a tenant for the short term if that is what you were intending to do anyway, it’s a bonus, perhaps it might be worth having the agent manage the property to keep the separation, and get checks to make sure he is going to be a suitable tenant.

    I am assuming your bank meant that he could not secure finance this early for the property, so if it had a subject to finance clause for a long term than in 9 months time if he can’t secure finance the sale falls though. He probably just has to wait for the proceeds of sale or transfer of his existing property, so it is something you have to decide on.

    As long as a formal sale contract is finalised you should have a claim for some costs, though this could also be a headache to go through court if it gets to that so is it worth it?

    One final thing I can suggest is to find out more information on why he wants the long settlement, if it is due to a pending transfer from his marriage breakdown, perhaps suggesting a “sunset clause” could be a better option. Essentially this allows you as the seller to continue to take offers on the property whilst it is under contract, and the buyer isn’t locked into buying until his other property settlement is completed. In the event you get a suitable offer or better offer (if the price goes up over 6 months you may get a better offer), you simply give notice to terminate the contract and the first buyer has the days stipulated (3 or so) to go unconditional on the contract or forfeit the property.

    Then you can simply tenant the property as a separate matter from the first sale contract to him if he so wishes, but if you do get an offer the following week, it is now with a 12 month lease, so you cannot sell it with vacant possession.

    Profile photo of aussieguy2000aussieguy2000
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    Hi Paul,

    Welcome to the weird and wacky world of property investing, I have been at it as an amateur for over 10 years now and still feel like I really know next to nothing, these forums are an excellent place to ask questions and learn things.

    Good luck with your investing.

    Profile photo of aussieguy2000aussieguy2000
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    Not to sound facetious, but can everyone list the top 5 best films?

    My point being, everyone will have a different opinion. Also price would be another thing, no good list 5 million dollar plus suburbs if you only want to spend $300K

    For Brisbane, I am seeing a lot of activity stirring in Brissy and from experience am finding the inner north side not too bad (Chermside area and closer to the city not out in the sticks like North Lakes, not that it is a bad area, I just think it is too far out and the traffic is horrendous, but it's good for a middle class family with a single income).

    I find Kedron to be a nice area, it is not too far from the city, near the toll road tunnels if you use them (and they can save a bit of time and traffic)  and the Kedron brook + bikeway is a nice family and dog friendly area, not to mention the nearby bus way. It is where the prices start going up, I also like Newmarket, Windor, Wilston, Grange area, but these areas get a bit pricey, there is also Wavell Heights, Chermside area that aren't too bad either.

    As some others have mentioned Toowong is an not a bad place either, I enjoy that area when I go there, but I am not too sure on the pricing.

    As for capital growth, that's always speculation, I find a handy bit of advice to ignore in this situation is the one on not getting emotionally attached. That's because if you can become emotionally attached to the area/ suburb (NOT house!!!) then others will too. Once you fall in love with it, put your investor cap back on and remove the emotion from the individual property purchase.

    Profile photo of aussieguy2000aussieguy2000
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    I would also recommend a broker, you can always walk away (and I have on a few occasions in the past) if they can't give you the best deal for your situation. I wish I had been able to find a decent broker back when I started buying property, but the internet and brokers weren't a big thing back then (not how they are now with property anyway).

    Profile photo of aussieguy2000aussieguy2000
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    Benny wrote:

      "they cannot be a normal tax deduction as the property is not rented"      So, for clarification, has the Sydney place been not rented for the last 4 years?   Or is there more to the story?  e.g. "it was rented, but the tenants moved out xx months ago….." 

    To elaborate on that part, I meant the house we are currently living in in Brisbane as normal things you would claim if renting it out, can't be claimed as the property is not income producing but rather for private use. Depending on exactly what I can claim, I may possible be able to reduce the CGT liability to 0 (if not, close to), whereas we would never be able to do it for the property in Sydney as it has been rented out since we moved out of it.

    So basically to reset the 6 years, living in it is the only way, anyone who says otherwise is just being dodgy and potentially committing fraud? I am assuming if I were to move into it for a month, say over Christmas or something, pay to get the electricity and gas on in my name for that month, and then move out, that, whilst may be frowned on, would be legitimate, as I really did live there. (As obviously not claim any other residence as PPOR during this period).

    At this stage end of 2009 was when we rented it out, so we have until the end of 2015 before we really need to worry, but time can fly and I want to be prepared. We are probably going to sell and buy something else newer before that time, to alleviate repair costs for an ageing property, better depreciation and most importantly access the equity in the property for reducing interest payments on our next PPOR when we buy… (pushing up the LVR for the next investment whilst lowering it for out next PPOR)

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